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- Blomquist, N. Sören, et al.
(författare)
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The political economy of publicly provided private goods
- 1998
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Rapport (övrigt vetenskapligt/konstnärligt)abstract
- A large share of public funds is spent on private goods (education, health care, day care, etc.). This paper integrates two different approaches to the analysis of public provision of private goods. While normative public economics has established an effi
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| 5. |
- Blomquist, Sören, et al.
(författare)
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Public Provision of Private Goods and Nondistortionary Marginal Tax Rates
- 2010
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Ingår i: American Economic Journal: Economic Policy. - : American Economic Association. - 1945-7731 .- 1945-774X. ; 2:2, s. 1-27
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Tidskriftsartikel (refereegranskat)abstract
- Using an optimal taxation model combined with a previously neglected scheme of public provision of private goods, we show that there is an efficiency gain if public provision of selected goods replaces market purchases and that efficiency requires marginal income tax rates to be higher than if the goods were purchased in the market. Part of the marginal tax serves the same role as a market price and conveys information about a real social cost of working more hours. It might be that economies with higher marginal tax rates have less severe distortions than economies with lower marginal tax rates. (JEL H21, H42, I38).
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| 6. |
- Blomquist,, Sören, et al.
(författare)
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Public Provision of Private Goods and Nondistortionary Marginal Tax Rates : Some Further Results
- 2009
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Rapport (övrigt vetenskapligt/konstnärligt)abstract
- The incidence and efficiency losses of taxes have usually been analyzed in isolation from public expenditures. This negligence of the expenditure side may imply a serious misperception of the effects of marginal tax rates. The reason is that part of the marginal tax may in fact be a payment for publicly provided goods and reflects a cost that the consumers should bear in order to face the proper incentives. Hence, part of the marginal tax may serve the same role as a market price in the sense that it conveys information about a real social cost of working more hours. We develop this idea formally by studying an optimal income tax model in combination with a type of public provision scheme not analyzed before; the provision level is individualized and positively associated with the individual’s labor supply. As examples we discuss child care, elderly care, primary education and health care. We show that there is a potential gain in efficiency where public provision of such services replaces market purchases. We also show that it is necessary for efficiency that, other things equal, marginal income tax rates are higher than in economies where the services are purchased in the market. This because the optimal tax should be designed so as to face the taxpayers with the real cost of providing the services. Hence, it might very well be that economies with higher marginal tax rates have less severe distortions than economies with lower marginal tax rates.
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| 7. |
- Blomquist, Sören, et al.
(författare)
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Public Provision of Private Goods and Nondistortionary Marginal Tax Rates
- 2007
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Rapport (övrigt vetenskapligt/konstnärligt)abstract
- The incidence and efficiency losses of taxes have usually been analysed in isolation from public expenditures. This negligence of the expenditure side may imply a serious misperception of the effects of marginal tax rates. The reason is that part of the marginal tax may in fact be payment for publicly provided commodities and reflect a cost that the consumers should bear in order to face the right incentives. Hence, part of the marginal tax serves the same role as a market price in the sense that it conveys information about a real social marginal cost of working more hours.We develop this idea formally by studying an optimal income tax model in combination with a type of public provision scheme not analyzed before; the provision level is individualized and positively associated with the individuals’ labour supply. As examples we discuss day care, elderly care, primary education and health care. We show that there is a gain in efficiency if public provision of such a service replaces market purchases. We also show that it is necessary for efficiency that marginal income tax rates are higher than in economies where the services are purchased in the market. This is because the optimal tax should be designed so as to face the taxpayers with the real cost of providing the services. Hence, it might very well be that economies with higher marginal tax rates have less severe distortions than economies with lower marginal tax rates. We also explore whether an efficiency gain is achievable by alternatively making day care expenses tax deductible and derive a negative conclusion.
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| 9. |
- Blomquist, Sören, et al.
(författare)
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Public Provision of Private Goods, Self-Selection, and Income Tax Avoidance
- 2016
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Ingår i: Scandinavian Journal of Economics. - : Wiley. - 0347-0520 .- 1467-9442. ; 118:4, s. 666-692
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Tidskriftsartikel (refereegranskat)abstract
- Redistributive taxation should benefit those with low earnings capacity rather than those who choose a lower income to obtain tax savings. Several contributions have highlighted how public provision of work complements can discourage people from lowering labor supply to diminish taxable income. We show how tax avoidance, previously neglected, can alter the conclusions regarding public provision. Tax avoidance breaks the link between labor supply and reported income. An agent reducing his reported income to escape taxes might no longer forego a publicly provided labor complement, because he can now lower his income by avoiding more rather than working less.
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| 10. |
- Blomquist, Sören, et al.
(författare)
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Public provision of private goods, self-selection and income tax avoidance
- 2011
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Rapport (övrigt vetenskapligt/konstnärligt)abstract
- Several contributions in the optimal taxation literature have emphasized that, when individuals. preferences are not separable between leisure and other goods, it is desirable to supplement a nonlinear income tax with public provision of private goods. Moreover, it has also been shown that the choice between a topping-up and an opting-out scheme depends on whether the publicly provided good is a complement or substitute with leisure, with opting-out (topping-up) being the preferred scheme for goods which are substitutes (complements) for labor. In this paper, using the self-selection approach to tax analysis, we revisit these results in the presence of tax avoidance, and investigate how public provision interacts withthe agents.incentives to engage in tax avoidance. Three results are obtained. First, we show that tax dodging opportunities imply that non-separability between labor and other goods is neither a necessary nor a sufficient condition to make public provision of private goods a welfare-enhancing policy instrument. Second, we show how tax dodging opportunities limit the scope for using topping-up provision schemes as a redistributive device. Finally, we show that, for most of the public provision schemes previously analyzed in the literature, being a welfare-enhancing policy instrument goes hand in hand with weakening the agents.incentives to shelter income from the tax authority. However, we also point out an important exceptionto this pattern.
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| 12. |
- Blomquist, Sören, et al.
(författare)
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Taxation and heterogeneous preferences
- 2008
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Ingår i: Finanzarchiv. - 0015-2218 .- 1614-0974. ; 64:2, s. 218-244
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Tidskriftsartikel (refereegranskat)abstract
- Nonlinear income taxes and linear commodity taxes are analyzed when people differ with respect to ability, high-skill agents have heterogeneous preferences, and neither individual abilities nor preferences are observable. We characterize pure income tax optima, which may be bunching or separating optima. In particular, the income tax may not be able to distinguish between those low-income people who are low-skill and those who have a strong preference for leisure. As is shown, there may still be an effect on the optimum income tax schedule, as it will depend on the composition of the population with respect to types of individuals. Finally, the paper addresses what can be achieved by commodity taxes when preferences are heterogeneous - in particular, with respect to targeting groups that the income tax is incapable of discriminating between.
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| 15. |
- Blomquist, Sören, et al.
(författare)
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The political economy of publicly provided private goods
- 1998
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Rapport (övrigt vetenskapligt/konstnärligt)abstract
- A large share of public funds is spent on private goods (education, health care, day care, etc.). This paper integrates two different approaches to the analysis of public provision of private goods. While normative public economics has established an efficiency case for such provision, the commonly held political economy view has been that it is an economically inefficient phenomenon generated by the political process. The present paper argues that the central mechanism studied in the normative approach is equally relevant to voting models of decisions on public provision. It is shown that under plausible information constraints economically efficient public provision of private goods will be part of politically rational decisions emerging from a median voter process or a representative democracy of political parties.
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| 18. |
- Blomquist, Sören, et al.
(författare)
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The role of prices on excludable public goods
- 2001
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Rapport (övrigt vetenskapligt/konstnärligt)abstract
- When a public good is excludable it is possible to charge individuals for using the good. We study the role of prices on excludable public goods within an extension of the Stern-Stiglitz version of the Mirrlees optimal income tax model. Our discussion includes both the case where the public good is a final consumer good and the case where it is an intermediate good. We demonstrate that for a public consumer good charging a positive price may be desirable, but only under certain conditions. However, charging a lower than optimal price may be less efficient than setting a zero price. Conditions are identified under which consumers should be rationed in their demand rather than adjusting demand to price. We also conclude that producers using an intermediate public good as an input should not be charged a positive price.
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| 20. |
- Blomquist, Sören, et al.
(författare)
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Why politicians favor redheads : a theory of tactical horizontal redistribution
- 2000
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Rapport (övrigt vetenskapligt/konstnärligt)abstract
- This paper studies a very pure form of “vote purchasing”. We consider whether it may be in the interest of a party to discriminate between groups that, possibly except for size, are identical in all welfare relevant aspects, i.e. the groups are assumed to have the same income, needs, etc. To emphasise this aspect we label the groups brown-heads and redheads. The interpretation is that they differ only in some characteristic that is entirely irrelevant from a welfare perspective. There are no systematic differences between people with the same income. Taking two samples of people from an income class their political support will be identically distributed. We will show that even with these uniformity assumptions there can be strong incentives for political parties to undertake vote purchasing by favouring one of the identical groups at the expense of the other.
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